The government is undertaking a ‘Fair Funding Review’ in conjunction with councils. The aim of this review is to propose a new system for allocating funding between councils, which will be based on updated and improved methods for estimating councils’ differing revenue-raising capacities and differing spending needs. The IFS and CIPFA hosted a roundtable on 12th September 2018 to discuss some of the big questions the review needs to address and tricky issues it needs to contend with.
The big questions include:
- How should redistribution and incentives be balanced in the new system?
How can the subjective judgements required in designing and implementing a new system be exercised transparently?
The tricky issues include:
- What data, indicators, and methods should be used to assess councils' spending needs?
How can we account for councils' abilities to raise revenues from council tax, and other sources?
This presentation, which kicked off the roundtable, sets out the key findings from recent IFS research which highlights these issues, and looks at how different choices on assessing needs, measuring revenue-raising capacity, and balancing redistribution and incentives, could affect different councils.